Random Thoughts

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Is there such a thing as bellwethers anymore? Back in the day, we used to talk of the four horsemen--Intel (INTC), Cisco (CSCO), Dell (DELL) and Microsoft (MSFT). These days, they just seem to be over-owned proxies of promises past. I opined last year that energy and metals would be the relative leaders of the new market dynamic. I continue to feel that way although, as is my nature, I tend to nose scrunch when too many folks think the same way. Still, and as you know, energy has a long way to go before it's top dawg in the S&P, an eventual and unavoidable morphage in my opinion.

Minyan Steve Shobin will be joining John and I at tonight's Succofest as we welcome Minyan Stephen Haughey from Sveden. It is unclear, at this time, who will bring the Lederhosen.

"The AMEX Gold Bug Index (HUI) is up 3% today, breaking a new double top. Meanwhile, the point and figure price count for the HUI is to 332. So far we are not seeing any potential DeMark TD-Sequential indicator flies in the ointment." -- Pepe Depew

"The dreaded intra-day reversal strikes fear into the minds of traders and market observers as prices fail to hold the day's advance. There is little question that such price action is indicative of a market that has grown tired, but in fairness, there are differing degrees of failure. Dismissing or excusing negative price action is dangerous, and that is not our intention. We are, instead, attempting to frame it within a context, and that frame to us, while negative, is far from disastrous. In our minds, yesterday's price action was a piece of negative evidence, but it was not distributive (by our definition), nor was it climactic. Therefore, keep the course, but add a smidge of caution and defensiveness to your trading and decisions." -- Lehman chartist Jeff DeGraaf

"General Motors (GM) stock price is trading roughly for cash: the company has around $24 in cash if you consider GMAC has value. They have $15 outright per share in cash. That also assumes they will just roll their debt and not pay any off. In other words, the market is assigning no real value to the company as an ongoing entity. It is not trading off its income statement; it is trading off of its balance sheet. The biggest trade (perhaps that I have seen in my career) are hedge funds long the bonds and long puts. The retention value to bond holders in bankruptcy is pretty high and the puts act as a kicker for a zero stock price. But they are still paying a high price for this bankruptcy protection because of timing. The longer GM stays afloat, the lower bondholders' retention value goes as the company burns through that cash." -- John Succo on today's Buzz (position in GM)